>> Jul 27, 2012
The huge amount of money that can be spent on home repairs was the theme of a very funny 1986 movie starring Tom Hanks and Shelly Long. The title of the film ‘The Money Pit’ says it all. Something for first homebuyers to consider is the fact that the idea for the film originated from the large number of real life tales circulating among the general populace.
Problems with a house may not be obvious to the untrained eye. Faults with foundations, electrical system, plumbing and the roof can be very expensive to remedy. A ‘maintenance free’ home may be one that has not been maintained for 25 years. No need to worry about a newly constructed home though is there? Not true say experts, have any home you are thinking of buying inspected.
And that is the answer – have a fully qualified housing inspector check the house and provide buyers with a detailed report. The average fee Australia wide for this service is $500. Some building inspection services will even check a new house as it goes through the various construction stages so that any faults are found before they are covered up. They will check that the builder is sticking with the approved plans and complying with all of the regulations.
Real estate advisors list quite a number of other potential traps that first home buyers should be alert to: The naïve assumption that interest rates will not go up. Buyers should factor interest rate rises into their financial situation and be prepared to handle a 3 – 4 % rise.
Failure to be aware of the full costs of home purchase can be another problem. Items such as mortgage insurance, stamp duties, rates and body corporate fees all add to what comes out of the pocket. At one time the cost of mortgage insurance was added to the loan but this practice has ceased and the buyer must now pay with his / her own money.
Another scary one is what can result from non-payment of the deposit until finance is approved. The deposit is usually required within 3 days of the sale. Buyers thinking they can reduce their risk by holding off paying the deposit until finance is forthcoming may find themselves in a sticky situation. The standard contract says that if you want to cancel the contract because finance has not been approved you must not be in breach of any other part of the contract. Failing to pay the deposit can be in breach of the contract and therefore you would not be able to cancel the contract
The above are some of the dangers homebuyers need to be aware of. There are many more. Keep your eye out and be through with your research. Steer clear of deals that look ‘to good to be true’ as you know what, they probably are.